HL Deb 11 July 1957 vol 204 cc977-88

3.10 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord Strathclyde.)

On Question, Motion agreed to.

House in Committee accordingly

[The EARL OF DROGHEDA in the Chair]

Clauses 1 to 13 agreed to.

Clause 14 [Exchequer contributions towards receiving authorities' expenses under town development schemes]:

On Question, Whether Clause 14 shall stand part of the Bill?

LORD GREENHILL

I have taken the opportunity of giving notice to the noble Lord, Lord Strathclyde, that I should like to say a word on the Motion that Clause 14 stand part, and perhaps noble Lords will permit me to say just a word or two here. As the Committee will know, this clause deals with the regulations which the Secretary of State is to present in order to deal with Exchequer grants which will be received by receiving authorities in connection with expenditure incurred in the execution of town development schemes. The method adopted in this Bill is different from that adopted in a similar English measure. There, the administrative terms of the grant are fixed in the Act itself, whereas in this Bill we have the rather vague reference to regulations without any specific details having been given.

It is true that in the course of the Second Reading debate in another place the intentions of the Secretary of State were explained to the Members, but, although the methods are supposed to be- better than those adopted for England, I do not think they are as good; because while the English fixed rate resulted in a failure to produce the full development which it was originally hoped would be obtained from that grant—the proportion being 50 per cent. on a capital basis—the formula here is so complicated and difficult to understand that Members in another place, when considering this clause, asked what it meant. The Under Secretary of State went to the trouble to explain how the figures would be arrived at. In case noble Lords are interested, perhaps I can paraphrase the sort of particulars upon which the amount would be based.

First, there would be drawn up a notional income and expenditure account each year for each town development scheme. The expenditure side would show the loan charges incurred on monies borrowed for buying and preparing land providing water supplies, sewerage schemes and so on; it would also show certain maintenance charges. The income side would show the proceeds of any lands sold, plus the rating income the receiving authority would have earned if the valuation had been on the pre-town development level. Finally, the Exchequer would contribute 75 per cent. of the deficit on this notional account year by year, leaving the receiving authority to meet the balance, after deducting whatever contribution the exporting authority may make. I shall not be surprised if noble Lords do not follow the reasoning behind this particular formula. It is really a summary of the information which was given to Members in another place. I am inclined to think that this is far too complicated a measure.

It is also, I think, unacceptable, in that the amount which the Secretary of State is prepared to give under these regulations is quite inadequate. It is no good hiding the fact that both the receiving and the exporting authorities are not enthusiastically on the side of the transfer of what is called "overspill" population. In the case of the exporting side, there is the fear that, with a reduced rateable value leading to heavier rate burdens on a reduced population, they will be worse off. On the receiving side, there is the fear that, whatever may be the future outcome of these regulations, the immediate effect will be a heavier rating burden on the receiving authority without any guarantee that they will be better off in the long run. So, if the Secretary of State is to encourage this very necessary measure for providing accommodation for overspill he will have to show some greater generosity than he has already given evidence of, and show that he is serious in his desire to help both the receiving authority and the exporting authority.

As the noble Lord, Lord Strathclyde, is probably aware, the Government apparently ignore the fact that even with the £42 subsidy, plus the £14 contribution by the exporting authority, plus the £39 suggested by the Government as being the appropriate figure for rent, there will be a considerable deficit to be met by the receiving authority. I would ask, therefore, that if the Government are sincere in their desire to remedy this very bad situation—and the noble Lord is better aware than any other noble Lord I can think of of the terrific problem with which we are now dealing—they should give us an assurance to-day that in the regulations the grant to receiving authorities will be at least 75 per cent. of the annual deficiency arising from the provision of overspill houses.

THE MINISTER OF STATE, SCOTTISH OFFICE (LORD STRATHCLYDE)

The noble Lord, Lord Greenhill, has raised two questions to which I think it would be your Lordships' wish that I should reply. The first concerned the difference between the grant in relation to England and Wales and the grant in relation to Scotland. My right honourable friend the Secretary of State for Scotland has admitted from the outset that the assistance given to a receiving authority under the English system—that is 50 per cent. capital grant—will amount to more in the long term than under the proposed Scottish system of a grant based on 75 per cent. of the deficiency incurred. The noble Lord has told your Lordships how that deficiency will be arrived at. That is to be done by the compilation of an income and expenditure account year by year, and the 75 per cent. grant will be based on the deficiency brought out in that account. The Scottish system will give a bigger grant in the critical early years—that is before the development produces new income for the receiving authority. That, apparently, is where the "shoe pinches," and we believe that it is the effect of town development on their finances during this early period which has been deterring receiving authorities.

The noble Lord's second point was that there should be a grant of 75 per cent. on any deficiency which may arise on housing revenue account of the receiving authority due to overspill housing. Your Lordships will appreciate at once that any such grant would be merely an additional subsidy. I believe that the existing subsidy for Scotland, which is 42 per cent. per house for sixty years for overspill development, is generous. I believe that it takes into account the special housing conditions in Scotland and compares favourably with the English equivalent of £24. I do not accept for one moment that the provisions of this Bill will necessarily result in a net loss on housing account; nor that, even if such a loss does occur, the result of providing for overspill will be unfavourable to receiving authorities. What matters is the overall effect on the receiving authority's finances, including the increases in land values, both on the spot and in town centres, and the increases in rating resources presented by the houses and also by the associated commercial and other developments which naturally will take place.

Your Lordships may be interested to know that recently I proved to the satisfaction of one local authority which feared that overspill would be a considerable additional deficiency on its housing revenue account that, while a small loss might accrue on their housing revenue account, a scheme for 2,000 houses such as they had in view would produce, provided that reasonable rents were charged, an overall surplus of some thousands of pounds a year—and that was without taking into account any other than housing developments. If the noble Lord is interested, I can supply him with the figures that made up that calculation. We have never suggested that the rents for new houses should be limited to £39. What my right honourable friend has said is that an average rent of £39 for existing houses would provide an overall surplus in the immediate future in the housing revenue accounts of local authorities in Scotland.

LORD GREENHILL

In order to avoid ambiguity, would the noble Lord say specifically that the Government are of opinion that a figure of rent much in excess of £39 may be necessary?

LORD STRATHCLYDE

I would not say "much in excess". The rent would all depend on the arrangements made between the two authorities—the exporting authority and the receiving authority. I think that I have answered the points made by the noble Lord, I hope to the satisfaction of your Lordships.

Clause 14 agreed to.

Clauses 15 to 23 agreed to.

3.25 p.m.

THE EARL OF DUNDEE moved after Clause 23 to insert the following new clause:

As to conditions to be observed with respect to improvement grants

". Section one hundred and fourteen of the principal Act (which specifies the conditions to be observed in respect of dwellings which have been the subject of an improvement grant) shall be read and have effect—

  1. (a) as if in subsection (2) thereof—
    1. (i) the words ' or in the event of the voluntary alienation of a dwelling by the owner thereof during the said period ' and the words ' or of the voluntary alienation of the dwelling as the case may be ' were omitted; and
    2. (ii) after the word ' shall ' in paragraph (a) thereof there were inserted the words ' if the local authority in their sole discretion determine that repayment of such sum should be made '; and
  2. (b) as if—
    1. (i) in subsection (5) thereof there were omitted the words ' or on a voluntary alienation of the dwelling '; and
    2. (ii) in subsection (6) thereof there were omitted the words ' or of a voluntary alienation of the dwelling '."

The noble Earl said: I beg to move the Amendment which stands in my name on the Order Paper. It is intended to rectify a serious anomaly between the interpretation of the principal Act in Scotland and the interpretation of the corresponding Act in England. Under the Scottish Act, if an owner modernises a house, with the approval of a local authority, he may receive from the local authority a maximum improvement grant of either £400 or 50 per cent. of the cost, whichever is less; that is to say, if he spends £1,000 or £1,500 on modernising a farm worker's house, which often happens, his maximum grant would be £400. If the total cost was only £600, the maximum grant would be only £300, and so on. If the owner subsequently fails to maintain the conditions under which the grant is given, the local authority can require that the grant should be refunded. That is perfectly right, and it applies both in Scotland and in England.

If, however, the owner is obliged to sell the house, or if he makes it over to his son or to some other member of his family, what happens then? In England, the new owner is in the same position as the former owner: if he fails to fulfil the conditions of the grant, the grant is forfeited, but if he maintains the conditions of the grant, then it is not forfeited. But in Scotland the local authorities have been legally advised (and I think that they are bound to act on the advice which they are given) that immediately the property is transferred by an owner to his son, the local authority are bound automatically to require the refund of the grant, whether they want to do so or not. It may be that the legal advice they have been given does not correctly interpret the true intention of Parliament. I do not know: Acts of Parliament are sometimes very difficult to interpret.

I think that my new clause would rectify that situation, which cannot be justified. What we want to do is to give Scottish local authorities exactly the same discretion as is now possessed by the English authorities. We want to remove what is a serious deterrent to housing progress in Scotland. If an owner, who is an elderly man, sees that the time is soon coming when he ought to make over his property to his son, and he has a house which ought to be modernised, he is naturally deterred from doing so by the knowledge that immediately the transfer takes place, the whole grant will be forfeited. That is a thing which I do not think can be justified on any ground at all.

I am glad to see that the Government have taken the opportunity of this Bill to amend the law in relation to improvement grants, by providing in Part II of the First Schedule that where a local authority refuse an application for grant, they may be required to give their reasons in writing. That is not, of course, the same point that is raised in my new clause. I mention it only in order to show your Lordships that, since the Government have used this Bill to amend the law in relation to improvement grants, it is an appropriate Bill in which to insert a new clause of this kind. I hope very much that my noble friend will be able to accept the Amendment, or, if he cannot accept it in its present form, that he will at least undertake to rectify this injustice before Report stage. I think that we must try to clarify the law on this point and remove what is at the same time a serious injustice and an unfortunate deterrent to the improvement of housing conditions in Scotland.

Amendment moved—

After Clause 23, insert the said new clause.—(The Earl of Dundee.)

VISCOUNT STONEHAVEN

I beg to support my noble friend Lord Dundee in this Amendment, because I can see no detriment whatever to the Bill if this Amendment, or another appropriately worded, is inserted. The Government are continually telling us that they want the maximum use to be made of these improvement grants. Surely it is not logical to refuse to rectify an anomaly which prevents an express desire from being effected. The deterrent to people from taking advantage of a grant, on the ground that on a voluntary alienation they will lose the unexpired portion, has perhaps not been felt up to now as much as it will be, for the very reason that this anomaly was not published and advertised until a couple of months ago; and the majority of people did not even realise that it existed. Therefore, I support strongly my noble friend in this Amendment.

THE EARL OF MANSFIELD

My noble friend Lord Dundee has stated the position quite clearly, but there are one or two additional points that I should like to bring to the attention of your Lordships. Unless the Government are prepared either to accept this new clause or to rectify this position by some Amendment of their own, there is a distinct possibility that these measures will not be put into full effect in future in Scotland, because at the present time, when a man is hopeful of propelling his property to his heir, he naturally expects that the continuance of ownership in his family will go on. If, however, he finds that the grants will have to be compulsorily repaid in a way which is not the case if the estate is sold, it is probable not only that in a number of cases will there be no propulsion but also that a considerable number of owners will not take advantage of the grants, so that a number of houses which badly need reconditioning will not get it.

These Acts have been of the greatest possible value to the agricultural population in Scotland, although not so much to the landlord, because in many cases the landlord is already drawing no revenue from his properties and, therefore, is not in a position, by denying himself some additional income, to improve his house. In many cases, receiving grants has meant merely that the houses have been put in order, whereas it might have been many years before the owners would otherwise have been in a position to do so. It is surely most unfair that when a man sells his property the buyer should not have to repay the grant yet when the owner makes it over to his heir, the heir should have to do so. I therefore strongly support this new clause.

LORD STRATHCLYDE

My Lords, I have studied this Amendment carefully, and I have also listened with attention to what the noble Earl, Lord Dundee, and the other noble Lords have said in its support. I have to say at the outset that, while I have some sympathy with the objects which my noble friends have in view, the Amendment that has been moved is, I regret, not one which Her Majesty's Government can accept. What the noble Earl has in mind are certain differences between Scotland and England and Wales and the statutory restrictions to which houses improved with the aid of the grant are subject. As the noble Earl said, in both countries the relevant Statutes provide for the repayment of outstanding grants in the event of any breach of the statutory condition. The main condition is the restriction on rent that may be charged; and your Lordships will recollect that these restrictions normally apply for a period of some twenty years.

Under the Housing (Scotland) Act, 1950, the owner of a house improved with the aid of grant is also required to repay any outstanding improvement grant in the event of a voluntary alienation, which, of course, includes a sale. But, on the other hand, the owner can at any time ask the local authority, indeed, he can demand the local authority, to accept repayment of any outstanding improvement grant, whereupon the house ceases to be subject to restrictions.

I think I should explain the situation in England and Wales. There, as the noble Earl said, there is no provision covering repayment in the event of voluntary alienation of the house; but during the period for which the conditions must be observed the house must be kept available for letting if it is not occupied either by the owner who received the grant or by a member of his family. I am advised that that means that the house cannot be sold with vacant possession for owner occupation. Also, in England and Wales the owner, unlike the Scottish owner, is not entitled to repay the grant at will, since the acceptance of repayment is in the discretion of the local authority. I have mentioned these differences because they appear to me to be relevant to the Amendment.

The two codes have differed since the outset of the improvement grant scheme in 1949. At that time they were separately framed and took into account the differences in the law and the practice of the two countries. In particular, provision for repayment of grant on the sale of a house was, according to my recollection, included in the Scottish code with the express object of preventing possible abuse of the improvement grant facilities through the sale of improved houses at substantial profit. At that particular time when the provision was enacted, in 1949, it was thought that there was a special risk of that happening in Scotland, where it was expected that it would become increasingly common to subdivide large houses and to sell the resulting flat.

I have to point out that this Amendment, which I think is intended to bring the law in Scotland and England into line, goes very much further. The English code, as I have tried to explain, requires that the property shall be occupied by the owner or a member of his family or be made available for letting. This Amendment would have the effect of freeing the owner from all restrictions on his right to sell his property, after receipt of improvement grant just as and when he thought fit. I know that that is not what the noble Earl has in mind; he is really thinking of the transfer of property from father to son. However, that is the effect of the Amendment: that it would allow someone who has improved his property with the help of an improvement grant to sell it without any restrictions whatever. That is a proposal which I am afraid the Government could not possibly accept.

I said at the opening of my reply to the noble Earl that I had some sympathy with the object he has in view, and I am quite prepared to agree that a case can perhaps be made out for modifying restrictions on the sale of improved property in Scotland so as to bring them more into line with England and Wales. But it may be that other modifications to the improvement grant scheme are called for in the light of the experience which has been gained since the scheme was introduced some eight years ago, and it seems to Her Majesty's Government that the whole subject could best be dealt with as part of a general review of the working of the improvement grant scheme. I can say that it is the intention of the Government to take in hand such a review. While I cannot promise any early legislative action, I can give this assurance to my noble friend: that the point he has raised in this Amendment is one that will be kept in mind during the course of that review. In all the circumstances which I have mentioned, I cannot advise the Committee to accept the Amendment; but in the light of the assurance I have given perhaps the noble Earl may feel that he need not press it further.

THE EARL OF DUNDEE

If I understand him rightly, my noble friend has given as the reason against the Amendment that if an owner wishes to sell the house not as a lettable subject, but with vacant possession, he then has the right to demand that he should give back the grant he has received. Naturally he would have to give it back; but he is then, surely, in exactly the same position as he would have been if he had reconditioned his own house without a grant at all. No-one has any reason to complain. I do not see how that affects the position of an owner who gives an agricultural cottage—a cottage which is intended as a residence for an agricultural worker or an estate worker and which has been reconditioned—to his son, there being no question of its ever being sold with vacant possession, and then finds that the son who receives the property has to refund the grant which has been contributed towards its modernisation. It seems to me that that is a great injustice which does not apply in England, and which we ought to try to rectify in Scotland.

I wonder whether the noble Lord could make any distinction between the question of sale and the question of gift to a member of the owner's family, and whether anything could be done to rectify the position a little more quickly? If not, could he undertake that the inquiry which may take place will deal seriously with what I cannot help feeling is an utterly unjustifiable state of affairs and a great deterrent to the improvement and modernising of houses in Scotland?

LORD STRATHCLYDE

The noble Earl has said, as has the noble Earl, Lord Mansfield, that this is a serious deterrent to the provision and modernisation of houses in Scotland. I shall be grateful to the noble Earl if he could produce any information as to that, because it would appear from the figures that are available that the scheme is working extraordinarily well at the present time. We have not hitherto heard of the point he mentioned.

THE EARL OF DUNDEE

Because it has only been known for the last few months.

LORD STRATHCLYDE

That may be. I am only telling the noble Earl that we have not had any serious complaint—in fact, no complaint—of its being a deterrent up to this date. I see the noble Earl's point. It is not his desire that persons who make use of improvement grants should be able to profit out of it, but it is his desire that, where a member of the family is concerned, the house might pass to such a member without his having to repay the grant. My right honourable friend the Secretary of State has considered this matter, and he feels that it would be much better dealt with by having a review of the whole situation. I shall certainly see to it that what noble Lords have said to-day is drawn to the attention of that inquiry.

THE EARL OF DUNDEE

Can the noble Lord say whether this inquiry is going to start within a reasonable period, and whether it is likely that something will be done to rectify this position during the lifetime of the present Parliament?

LORD STRATHCLYDE

I regret that I cannot give an assurance as to that.

THE EARL OF DUNDEE

I am afraid I cannot pretend to be wholly satisfied with what my noble friend has said on this matter; but in view of the assurance he has given that there will be, I hope, an early review of the matter, and that it will be dealt with by the Government, I do not wish to take up the time of the Committee by pressing the matter any further. I would therefore ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Remaining clauses agreed to.

Schedules agreed to.

Bill reported without Amendment.

House resumed.